INDIA:POWER SECTOR STRESS CAUSING BANKING DISTRESS

Rating agency ICRA has estimated a subsidy dependence of ₹ 850 billion amid low tariff hikes allowed for discoms in 2018-19, and expects improvement in thermal plants capacity utilisation or PLF in near to medium term. The all India electricity demand growth slowed down to 3.1 percent on a year-on-year basis in the first two months of FY2019 against the growth of 7.5 percent reported in Q4 FY2018 and lower than the growth of 5.9 percent witnessed in the first two months of FY2018, it said. However, May-2018 witnessed the highest ever monthly electricity demand at all India level. With respect to the distribution segment, the SERCs in 21 out of the 29 states have issued tariff orders for FY2019 so far, reflecting reasonable progress in the issuance of tariff orders for the year, it said. According to ICRA, the median tariff hike based on the tariff orders issued in the 21 states remained low at 2 percent, with the SERCs in seven states not approving any tariff hike and the downward revision in tariff in two states.

Gujarat, Maharashtra, Rajasthan, Bihar and Jharkhand together want to buy 3,000 MW of power under a government scheme to promote purchases from plants without PPAs. Under the scheme, PFC Consulting will conduct the auction for 2,500 MW capacity and PTC India will sign three-year (mid-term) PPAs with successful bidders and contract with discoms sell electricity. The development comes at a time when states are buying more power from the spot markets, indicating a rise in demand. The power ministry has recently suggested to make it mandatory for electricity discoms to tie up long- or medium-term PPAs to meet their ‘annual average power requirement’ in their areas of supply. Short-term power volumes grew 8% year-on-year to about 129 billion units, comprising about 15 GW capacity in FY18, and the spot market trading at the Indian Energy Exchange grew at 14%, trading more than 46 billion units from 5.3 GW of power plants. Maharashtra, Tamil Nadu, Bihar, Gujarat and Uttar Pradesh were the largest buyers from the short-term market. The Central Electricity Authority has reported that there was a more than 10% annual increase in electricity demand in Uttar Pradesh, Chhattisgarh, Telangana, Arunachal Pradesh, Manipur and Tripura in FY18. The pilot plan proposes that a single entity, which quotes or matches the lowest bid in the auction, will be allocated a maximum capacity of 600 MW. A company cannot quote part capacity from different power stations in the same bid. If PTC procures power less than 55% of contracted capacity in a month, the plant would be paid compensation, the quantum of which would be linked to spot power prices at the Indian Energy Exchange.

Stressed power projects of Adani, Tata and Essar groups may get a favourable package soon as a panel headed by a former Supreme Court judge has been appointed to resolve issues of ₹ 400 billion of projects idling or underutilised because they are unviable. The panel’s recommendations, which may include making tariffs viable by reviewing the power purchase agreements, or acquisition of the projects, are expected in two months. The government of Gujarat, where the plants are located, says reviving these plants will help consumers get much cheaper electricity and has asked the panel to submit its recommendations in two months. With such a large capacity shut down, Gujarat, Haryana, Punjab, Rajasthan and Maharashtra, which would together get 8,000 MW of power from these plants, are facing a huge shortage. Gujarat had to purchase costly electricity from the spot market at an additional cost of ₹ 30 billion in the last few months.

NTPC Ltd announced it has acquired two power projects with combined capacity of 2,590 MW at Nabinagar and Muzaffarpur in Bihar. The 1,980 MW Nabinagar Super Thermal Power Project is being set up in Aurangabad district by Nabinagar Power Generating Company Pvt Ltd in which NTPC and BSPGCL already own equal stake. NTPC has now acquired BSPGCL’s 50 percent stake in the project. The currently operational 610 MW Muzaffarpur Thermal Power Station is developed by Kanti Bijli Utpadan Nigam Ltd, a subsidiary of NTPC in which BSPGCL holds 27.36 percent stake. NTPC has now bought BSPGCL’s entire equity interest.

The government is looking at a proposal to allow neighbouring nations like Bhutan to participate in domestic electricity exchanges including Indian Energy Exchange, the largest platform for spot power trade. The idea is to deepen the country’s market for sale and purchase of electricity by boosting volumes. The government expects more supply to come into the system and an increase in the number of registered consumers on the exchange. The country generates around 1,200 billion units of power annually, around 10 percent of which is transacted in the short-term market. This includes bilateral trade (4.7 percent); day-ahead transactions on the exchanges (4 percent) and Deviation Settlement Mechanism accounting for 1.7 percent. India imported 5,600 million units of power from Bhutan last financial year.

MERC has given its approval to the proposed 100% stake sale of Reliance Infrastructure’s integrated Mumbai power business to ATL. Following the commission’s nod, the transaction is expected to be closed in July 2018. MERC had concluded its hearing into the matter and reserved its order on 14 June 2018. Reliance Infrastructure has already received the approval of Competition Commission of India and its share-holders for the deal. Reliance Infrastructure and ATL had signed Definitive Binding Agreement for 100% stake sale of the integrated business of generation, transmission and distribution of power for Mumbai in December 2017. The total consideration value of the deal is estimated at ₹ 188 billion.

Axis Bank has put up for sale Lanco Kondapalli Power, which owns and operates 1476 MW gas based power plants as the power producer failed to pay dues. Without mentioning the name of the company Axis Bank called EoI for the sale of three gas-based power projects with a combined capacity of 1476 MW. The power projects are of Lanco Kondapalli, which was once a subsidiary of beleaguered Lanco Infratech Ltd. The lenders have to find a suitable resolution for their debts before September 16, lest the creditors approach the National Company Law Board for a resolution. Lanco Kondapalli a 368 MW gas-based plant is operational since October 2000. Phase-II 366 MW is operational since December 2009 and Phase-III 742 MW is operational since January 2016. While Phase-I is operating with limited gas supplies, Phase II and III are not producing any power due to lack of gas supplies. Axis Bank sought in case of strategic investors, sought bids from parties who have net worth of ₹ 3 billion as on March 2017 or later. It wanted the financial investors with ₹ 10 billion worth of Assets Under Management or ₹ 5 billion committed funds available for investment in future on the plants.

The power ministry is mulling a reward of ₹ 500,000 for state utilities employees and a grant of ₹ 500 million for discoms which will meet household electrification target under Saubhagya scheme at the earliest. Under the ₹ 163.20 billion Pradhan Mantri Sahaj Bijli Har Ghar Yojana – ‘Saubhagya’ scheme launched last year in September, the government aims to electrify all 36 million un-electrified households by December-end. The ministry will form different group of states based on the parameters like geography and number of households to be electrified. Among each group, the state completing the task of 100 percent household electrification at earliest will be rewarded. In each group, only the top performer will be rewarded. The move is aimed at incentivising state discoms to compete against each other to give a push to achieve the objective of 100 percent household electrification under ‘Saubhagya’ Scheme. According to the Saubhagya portal, 81,41,950 families have been provided electricity connection so far under the scheme, while the work is on to energise 27,846,217 households across the country. The largest number of 14.9 million unelectrified households are in Uttar Pradesh out of which 1,999,000 have been provided electricity connection so far. At the second place, there are 3,344,000 un-electrified households in Bihar, out of which 1,555,000 have already been electrified.

TPDDL will start its ambitious project to install smart meters covering all its 160,000 consumers in the national capital from this month. The discom (distribution company) is set to install smart meters and also launch a mobile app for consumers to access real time energy consumption. In the first phase, 200,000 smart meters would be installed in North and North-West Delhi in the next one year. 500,000 meters are planned to be installed in the next two years and in the third phase all 1.6 million consumers are to be covered by 2025, said a spokesperson of TPDDL. The project has already started with installation of communication and back-end IT infrastructure last year and now metre deployment is commencing from this month, the discom said. A smart meter is equipped with a display screen that shows consumption of power and also communicates with the power supplier for metering and billing.

Tata Power Company has filed a mid-term review petition before the electricity regulator, proposing to reduce tariff for high-end consumers by up to 20% and increasing rates for low-end residential users by 7%. For the first time, the utility firm has proposed a new category for ‘electric vehicle’ (EV) charging instead of clubbing it under a different category. Tata’s petition indicated that the special tariff will be ₹ 5.16/kWh which includes basic energy charge of just ₹ 3/kWh — applicable for those wanting to drive battery operated cars / two-wheelers in Mumbai. A single full charge of battery can run a car for as long as 120 kilometre (km) and the cost could come to ₹0.60-0.70/km. The MERC petition indicated that the tariff for low-end residential users, especially in the 101-300 units consumption category will go up by 0.44/kWh from the existing ₹ 6.44-₹ 6.88/kWh (7% increase). This cost will include the wheeling charges and the RAC. The RAC is a charge for past recoveries of Tata Power, which could not be recovered since the approved tariff was not sufficient to recover the costs incurred. If one goes by the break-up of the charges that all residential users will pay, the basic energy charge has not been hiked at all. In fact, the proposed energy charge component has dropped by an average 5.5%, but there is a corresponding increase of 19% in wheeling charges and another increase in the RAC, which consumers will have to pay in their bills.

Ahead of assembly polls scheduled to be held this year end, Madhya Pradesh government waived power bills and dues amounting to ₹ 51.79 billion and announced the implementation of fixed power tariff scheme in a bid to benefit 16 million labourers and BPL families. Poor families can avail electricity connection at a fixed rate of ₹ 200 per month. Besides this, the government has also waived off their power dues and announced to withdraw cases of power theft and illegal connections against them. Consumers availing flat rate power benefit of ₹ 200 per month will be allowed to use four bulbs, two fans, a water cooler and a television. Those who have not applied for new electricity connections will be given connections free of charge.

Himachal Pradesh sought the Centre’s intervention in settling electricity arrears with neighbouring Punjab and Haryana pending for over half a century in three Bhakra Beas Management Board projects in compliance with a Supreme Court order. The differential energy quantum of 13,066 million units would fetch ₹ 32.66 billion to the hill state at an average rate of ₹ 2.50/kWh. The Union government was urged to help provide state’s royalty of ₹ 32.66 billion on the water used for power generation on rivers flowing through the state. Major power projects such as the Bhakra and Pong dams were located in the state but it was unfortunate that it had been deprived of its legitimate share from these projects as compensation. Special grants and liberal financial assistance was sought from the centre for mini and micro hydroelectric projects in remote areas. Of the total 27,000 MW power generation potential, Himachal has tapped only 10,547 MW till date mainly due to limited resources.

Power production in the 800 MW seventh unit of KTPS in Telangana has commenced. The construction of the plant at an estimated cost of ₹ 5700 billion commenced on February 1, 2015 and the project has created a record of sorts with its completion within 40 months. Telangana State Power Generation Corp Ltd formally launched the power production in Paloncha and synchronised to the power grid last night. The Central Electricity Agency has stipulated a condition that any new power plant that is taken up shall be completed in all aspects within 48 months of its commencement. This plant was completed in less than that period and within 40 months and thus created a record. With commencement of power at the seventh phase of KTPS, the total availability of power in Telangana crossed 16,000 MW. The state government is all determined to take the state from a deficit power state to surplus state and with the same spirit the Bhadradri and Yadadri plants will be completed.

NTPC said it has recorded its highest quarterly power generation of 69.2 billion units in April-June this fiscal which is 7.45 percent more than that in the year-ago period. NTPC Group recorded the highest quarterly generation of 76.9 billion units against the previous highest of 76.1 billion units (in Q4 of FY2017-18). NTPC joint venture stations also recorded the highest quarterly generation of 7,701 million units. The company’s highest renewable energy generation of 411.24 million units is also a highlight of this quarter. The company has total installed capacity of 53,651 MW from its 21 coal based, 7 gas based, 11 solar PV, 1 hydro, 1 small hydro, 1 wind and 9 subsidiaries/joint venture power stations. NTPC is currently implementing an additional capacity of over 20,000 MW at multiple locations across the country.

Electricity consumers across the country will soon be able to pay their bills in small instalments. Prepaid meters are said to be a pro-poor step as smart prepaid meters will enable the poor to pay in small instalments as per convenience without the fear of connection being cut. The move will also eliminate the issue of wrong bills.

Haryana has accorded approval for installation of 1 million smart power meters in five districts of the states. A Memorandum of Understanding between EESL, a joint venture of PSUs under Union Ministry of Power, and Haryana Power Distribution Utilities would be signed soon. The decision was taken to improve the financial condition of power distribution companies, to encourage energy conservation and to tackle problems relating to payment of electricity bills. In the first phase old meters of five districts–Panipat, Karnal, Panchkula, Faridabad and Gurugram would be replaced with smart meters by EESL. Under the prestigious Mhara Gaon Jagmag Gaon scheme initiated by the state government in 2015, 400 feeders of 2,310 villages including district Panchkula, Ambala, Faridabad, Gurugram and Sirsa are getting round-the-clock power supply.

The PSPCL and the Haryana power utilities have improved their ranking in the sixth integrated rating for state power discoms that have been issued by the union power ministry. Punjab has been placed at the 11th position rising two slots from 13th the previous year and is yet to regain A+ grade which it held for two consecutive years 2014 and 2015. In 2016 was at the fifth slop and slipped to 13 in 2017. In the case of Haryana, there has been a marked improvement from 22nd and 24th to 9th and 13th Positions (B to B+ grade). Earlier these power utilities had been in C grade in a list of 41 state power utilities across the country. The previous year, their number was at 28th and 31st and was placed in the C+ category. For the sixth year in a row, the four state power utilities of Gujarat along with Uttarakhand Power Corp topped the annual rankings. At the same time, four out of five power distribution companies of Uttar Pradesh have not moved out of the lowest grade as per the report. All the three discoms of Rajasthan are in the B category due to high power purchase costs and low bill collection efficiency. The PSPCL performed well in the key area of lowering the AT&C losses while it floundered in revenue collection because of its absolute dependence on the state government for the release of subsidy being given in lieu of free power to agriculture and delay in receipt of same. Besides, it also lost points due on account of high employees cost. However, the utility consolidated its standing with the timely revision of power tariffs. In case of Haryana’s UHBVN and DHBVN, the key concerns were high AT&C losses which were calculated at 32% for UHBVN and 29.09% for DHBVN. Besides, low billing efficiency, high power purchase cost at ₹ 4.76/kWh and high employees cost pushed the two power utilities down on the ranking. The strength of the power utility was the timely collection of subsidy amount and reduction in its debt liabilities. Out of 41 state power utilities, there are five utilities with A+ grade, two with A grade 13 with B+ grade 11 with B grade, two with C+ grade and 8 with C grade.

Punjab government was accused by the federal BJP government of discontinuing free electricity scheme for ‘gaushalas’ (cow shelters). PSPCL is apparently sending bills worth ₹ 53.2 million to the 472 gaushalas registered in the state despite getting cow cess on electricity bills. The bills should have been waived off according to the state policy.

In a city that loses much of its electricity in theft, the PSPCL has shown a way out by pushing distribution cables underground and deploying technology to track illegal connections. With the introduction of underground cables, illegal usage of electricity and power losses will reduce. PSPCL is undertaking many projects to make Ludhiana a smart city and more efficient in terms of power. The reason why the electricity department wanted to go for an underground cable network is to prevent instances of electrocution, which are common when cables snap during rains and windy conditions. Underground cables also help avoid low voltage complaints, a persistent issue among residents of suburbs in the city. Underground cables are one of the major tasks undertaken by the PSPCL department. Now, 66Kb cables are installed underground from Amlathas to Kakowal — a distance of around 2 kilometre. This is the first time this type of project has been completed in Ludhiana city. The reason for starting underground cables is because there are many problems that occur when high wattage wires start functioning on poles. The central government has sanctioned ₹ 370 million under the Smart City project for better infrastructure in terms of electricity in Ludhiana. In this project — expected to begin soon — the distribution of underground cables will take place on National Road, Ghumar Mandi, and Phase 2 within a few months.

While the Delhi government has raised an alarm over an imminent power crisis in the capital due to depleting coal reserves, sources in the NTPC said that coal rakes had started coming in and enough power was available in the grid to tackle any crisis. The coal stock availability at Delhi’s thermal power stations increased a bit and stood at 101,985 mt. Delhi requires 56,000 mt coal daily for generation from the Badarpur, Aravali and Dadri thermal plants. Ideally, the coal stock should be for 15 days, i.e 840,000 mt. But NTPC said the stock situation was improving.

DERC has slapped a ₹20,000 penalty on a distribution company for “violation” of rules in a 10-year-old case of power theft. DERC imposed the penalty on BRPL on a petition filed by director of A K Mehta and Company, alleging violations of provisions of the Delhi Electricity Supply Code and Performance Standards Regulations, 2007. The Commission in its order on June 14 found that respondent BRPL has violated provisions of Regulations 52(viii) and 53(ii) of the Delhi Electricity Supply Code and Performance Standards Regulations, 2007. Regulation 52 (viii) of Supply Code, 2007, said that in case of suspected theft of power, the authorised officer will remove the old meter under a seizure memo and seal it in the presence of the consumer or his representative. The Commission observed that the personal hearing was held on October 06, 2009. However, the speaking order was issued on December 4, 2009 -after one month and 28 days from the date of personal hearing. However, the Commission observed that the regulation must be complied with whether it contains a mandatory or a directory direction.

An SNDL survey has found out that over 5,000 government and civic employees are not paying power bills and some are also pilfering power. SNDL said the survey was done in Tajbagh Teachers’ Colony, Borkar Colony, Sweeper Colony, Thakkargram, Police Line Takli, CPWD Quarters and Gandhibagh Police Colony. Not only were these employees not paying bills, many of them were pilfering power too. MSEDCL also faces problems due to erring government employees. Many of them stop paying power bills when they get transferred and then MSEDCL has problems in recovering the amount. Meanwhile, a serious failure by SNDL has come to light. There are over 4,600 old electro-mechanical meters still in use in the city. These meters are slow and cause a huge revenue loss to SNDL. On its failure to replace them with electronic meters, SNDL said the consumers had resorted to violence when franchisee teams went to their residence to install new meters.

The use of LED bulbs and tube lights has been made mandatory in all offices of Haryana. In this direction, all Administrative Secretaries, Head of Departments and Managing Directors of Boards, Corporations and Public Undertakings have been directed through a written communication to ensure replacing all inefficient lighting with LED lamps or tube lights by August 15, 2018, the new and renewable energy department said. All halogen, sodium bulbs and tube lights will be replaced with energy-efficient LED bulbs and tube lights. Use of incandescent lamps and purchase of sodium vapour lamps by government sector, government aided sector, boards and corporations and autonomous bodies have already been banned.

The government will consider making 24 degrees Celsius as mandatory default setting for air conditioners within a few months. AC makers were also advised to have labelling indicating the optimum temperature setting for the benefits of consumers both from financial and their health points of view, the power ministry said. The temperatures settings in ACs will be in the range of 24 to 26 degrees Celsius. Singh launched a campaign to promote energy efficiency in the area of air-conditioning. Some countries like Japan have put in place regulation to keep the temperature at 28 degrees Celsius. Under the guidance of ministry of power, the BEE has carried out a study and has recommended that the default setting in the air-conditioning should be at 24 degrees Celsius. The new campaign will result in substantial energy savings and also reduce greenhouse gas emission. After an awareness campaign of 4 to 6 months, followed by a survey to gather public feedback, the power ministry would consider making this mandatory. The power ministry estimates indicate that if all the consumers adopt, this will result in savings of 20 billion units of electricity in one year alone. BEE informed that, considering the current market trend, total connected load in India due to air conditioning will be 200 GW by 2030 and this may further increase as today only about 6 percent of households use ACs. As per the BEE’s current estimate total installed air conditioner capacity is 80 million TR in the country, which will increase to about 250 million TR by 2030. Considering this huge demand, India can save about 40 million units of electricity usage every day. The targeted commercial buildings will include airports, hotels, shopping malls, officers and government buildings.
Rest of the World

The World Bank has approved a $455 million loan to Tanzania under its IDA programme to support financing of power projects in the East African nation. The financing from IDA, which gives grants or low-interest loans to the world’s poorest countries, will also fund construction of high voltage transmission infrastructure to connect Tanzania to regional power markets in southern and eastern Africa. Tanzania boasts reserves of over 57 trillion cubic feet of natural gas, but faces periodic power shortages as it relies on hydropower dams in a drought-prone region. Last year President John Magufuli said the country needed to invest $46.2 billion over the next 20 years to revamp its ageing energy infrastructure and meet soaring electricity demand. Tanzania plans to boost power generation capacity from around 1,500 MW currently to 5,000 MW over the next three years by building new gas-fired and hydroelectric plants, according to the country’s energy ministry.

Zambia plans to introduce electricity tariffs that reflect the cost of power production by the end of 2018 and move away from a flat tariff of 9.30 US cents/kWh for mining companies. The permanent secretary for energy Emelda Chola said that the government had implemented the first phase of the migration by raising the price of electricity last year.

Nigeria has raised $1.57 billion for the rehabilitation of its transmission infrastructure from international backers. TCN was acquiring Supervisory Control and Data Acquisition System, a new energy management platform, which would help in providing transparency, as the industry activities can be monitored by operators of distribution, generation firms and other stakeholders, including online real-time fault detection and clearance. Two attempts by previous administrations failed but he raised a committee in 2017 to review the process and engaged EDF of France which raised a feasibility report on their installation and is being reviewed at the two day workshop. The company’s goal is to achieve 20,000 MW, through its Transmission Rehabilitation and Expansion Programme in the next four years was going according to plan and that the funding was raised from the World Bank, Japan International Cooperation Agency, African Development Bank among others. TCN had standardized its procurement process as incompetent contractors had abandoned 800 container shipments of transmission equipment for about 15 years at the ports. The transmission wheeling capacity had risen to 7,124 MW from the 5,000 MW. The Federal Government has called on international customers who receive electricity from Nigeria to either pay their bills or be disconnected. Nigeria sells power to the Republics of Togo, Niger and Benin, and classifies the West African countries as international customers. International customers, who pay for the power they receive from Nigeria in dollars, owed the country. Nigerian Bulk Electricity Trading Company has been approved to go ahead and collect its money from the international customers.

ADB will provide Bangladesh a $500 million loan to set up an 800 MW power plant in the southwestern region of Khulna. The plant, operating on the latest technology, will help meet the south Asian country’s growing demand for clean energy, ADB said. The total cost of the project is $1.14 billion, with the Islamic Development Bank contributing $300 million in financing and the government contributing $338.5 million over and above the ADB loan. Peak demand in Bangladesh, which faces recurring power generation shortages, is estimated at 10,400 MW while available capacity in 2017 was 9,479 MW. Net peak demand is expected to exceed 13,300 MW by 2020 and 19,900 MW by 2025, while existing generation facilities will gradually retire and need replacement. The plant, due to be completed by end-June 2022, will use the most advanced water treatment processes to purify and recycle liquid waste, leaving zero discharge. So far, ADB has provided around $5 billion in loans to Bangladesh’s energy sector.

Dubai Electricity and Water Authority has started testing the turbines in the M-Station expansion project in Jebel Ali, which is the largest electricity generation and water desalination plant in the UAE. The cost of the expansion project is AED1.47 billion and testing includes an initial operation of turbines and power generators and connecting them to the grid. Tests are scheduled to continue until the completion of the project in the fourth quarter of 2018. When completed, the project will increase the station’s total capacity to 2,885 MW, adding 700 MW.

Flying robots that can travel dozens of kilometres without stopping could be the next big thing for power companies. Utilities in Europe are looking to long-distance drones to scour thousands of miles of grids for damage and leaks in an attempt to avoid network failures that cost them billions of dollars a year. However the technology faces major safety and regulatory hurdles that are clouding its future in the sector. Snam and EDF’s network subsidiary RTE have tested prototypes of long-distance drones that fly at low altitudes over pipelines and power lines. Italy’s Snam, Europe’s biggest gas utility, said it is trialling one of these machines – known as BVLOS drones because they fly ‘beyond the visual line of sight’ of operators – in the Apennine hills around Genoa. It hopes to have it scouting a 20 km stretch of pipeline soon. France’s RTE has also tested a long-distance drone, which flew about 50 km inspecting transmission lines and sent back data that allowed technicians to virtually model a section of the grid. The company said it would invest €4.8 million ($5.6 million) on drone technology over the next two years. At present, power companies largely use helicopters equipped with cameras to inspect their networks. They have also recently started occasionally using more basic drones that stay within sight of controllers and have a range of only about 500 metres. Power grid companies are expected to spend over $13 billion a year on drones and robotics by 2026 globally, from about $2 billion now, according to Navigant Research.

The negotiations with the Turkish energy company, Unit International, to build two natural gas combined cycle power plants in Iran are in the final stage. The projects, with an investment of $1.2 billion, include building a 1,200 MW plant in the central city of Saveh, and an 800 MW plant in Zahedan near the Pakistani border. Negotiations have dragged on since June 2016 when Unit International reached a deal to build seven natural gas power plants in Iran before the two sides cut down the scope of the agreement to two plants.

Ethiopia inaugurated a 458 km 230 kV electricity transmission line that will transport electricity from Alamata in the north to Legetafo in central Ethiopia near the capital city Addis Ababa. The transmission line was built jointly by two Chinese firms, including Sichuan Electric Power Transmission & Transformation Construction Ltd and Jiangsu ETERN Company Ltd. Li Xiaodong, Project Manager of SPTTC, said the project will help Ethiopian consumers receive reliable power supply. Girma Zeleke, Transmission, Substation, Rehabilitation and Upgrading Project Manager of Ethiopia Electric Power on his part, said the 230 kV electricity transmission line built by the two Chinese firms is a first of its kind as it will work alongside another nearby 230 kV transmission line, helping end sporadic power cuts in Addis Ababa and other major cities.

Azerbaijan has been hit by a massive blackout affecting most of the country, the worst power outage since the 1991 collapse of the Soviet Union. A government commission has been set up to investigate the accident at a power plant in Mingechavir that caused the blackout. The emergencies ministry said a transformer’s breakdown in Mingechavir sparked a fire that was put out in 20 minutes and inflicted no casualties. The blackout came amid a heat wave in the Caspian Sea nation, with temperatures exceeding 40 degrees Celsius (104 degrees Fahrenheit) resulting in a power consumption surge that plunged the capital, Baku, and nearly 40 other cities and regions into pitch darkness. It took several hours to fully restore power in Baku but efforts to restore power in other regions continued.

The ERC of Kenya has restructured the subsidised tariff currently targeted at low income electricity consumers in a move that will see many that have enjoyed the low-priced power locked out. They will instead pay higher charges. Under a new billing structure by ERC, the lifeline tariff has been capped at 15 units of power per month from the current regime where low-income earners had a leeway of up to 50 units, and pay at subsidised rates. Poor households will also pay a higher rate for energy consumed in the new harmonised tariff of Sh12 per unit, compared to the current rate of Sh2.50 per unit. ERC has however scrapped the fixed charge that currently stands at Sh150 per month. It has instead factored it in the per unit cost of power. The new tariff, which ERC expects to be used for August billing, has also reduced power prices for the wealthy domestic power consumers. Households that consume over 1,500 units a month are charged Sh20 per unit but will now pay Sh16.50 a unit. The same charges will apply for people with less spending capability – consuming more than 15 units. The new tariff that will take effect in a month’s time is expected to be much simpler, and will give clarity to power consumers on how they are charged for their electricity. Under the proposed tariff, the energy industry regulator said prepaid customers would not get varying number of tokens whenever they spent the same amount. For example, if one spends Sh1,000 for the prepaid units, they will always get a constant number of units. The regulator however does not expect the changes to affect revenues for Kenya Power and the other sector players. It projects an average 10 percent increase in revenues for the sector, growing to Sh131.4 billion in the 2018/19 financial year. This is adequate to meet the financial obligations of the sector, including power infrastructure expansion and returns to shareholders that own power companies.

Norway will force big power consumers and producers to pay more for grid upgrades and extensions under a new regulation from 2019, the country’s water resources and energy directorate (NVE) said. The plan is widely opposed by Norway’s energy industry, which says it will have to foot a significant part of the bill, with grid investments of around $17 billion planned between 2016 and 2025. NVE decided to adopt the regulation in an amended version, effective from 1 January 2019, for consumers and producers of more than 1 megawatt per hour. The new regulation requires big consumers and producers to pay up to half the cost of any grid investment they require, in a move to encourage building power facilities in locations that already have strong grids, cutting the overall connection cost. In its amended version, NVE said grid companies can ask for an advance payment of up to 15 percent of the construction fee and a transition period will only include projects already granted a license. Existing customers that have filed requests for connection or increased capacity before July 1, 2018, will also be included in the transition period. In the amendments adopted, NVE has waived the requirement that the customer must have entered into a binding financial agreement with a network company or third party. The regulator has the authority to impose the changes unilaterally. Norway’s largest power consumer Norsk Hydro warned that the regulation would make grid costs a challenge for new project investments.

The leaders of the Baltic states and Poland signed a long-awaited deal to connect their power grids to the EU by 2025 and break their dependence on Russia, a Soviet legacy. Nearly ten years in the making, the politically fraught, technically challenging and costly plan to unplug Estonia, Latvia and Lithuania from Russia comes amid mounting concerns over Russian posturing in the region. The Baltic States, once ruled from Moscow but members of the EU and NATO since 2004, view being linked into Russia’s power network as a threat to their national security. Under the deal, states would use the existing overland LitPol Link between Lithuania and Poland, as well as a new high-voltage direct current cable to run under the Baltic Sea, looping around the territorial waters of Russia’s Kaliningrad exclave. The underwater cable will offer 700 MW capacity and could be completed by 2025. It will be used both for power trading and synchronisation purposes. Brussels is to negotiate with Moscow over how to maintain the power supply to Kaliningrad, which is currently synchronised with mainland Russia through the Baltic states. The deal proposes connecting Kaliningrad with two back-to-back power converters. Russia, on which the Baltic states currently rely to balance their power flows, has never cut power or threatened to do so, but the three EU nations fear it might and say there is a lack of transparency on upkeep of the network in Russia. Lithuania expects Baltic states to test their ability to work autonomously from Moscow in June 2019, before formally switching by 2025.

Britain’s exit from the EU could leave companies planning to build more power interconnections at the mercy of possible new trading arrangements and potential tariffs, Norway’s state-owned grid operator Statnett said. Statnett and Britain’s National Grid agreed before the Brexit vote to construct the first interconnector between the two countries by 2021. A separate consortium of Norwegian energy companies and Sweden’s Vattenfall is seeking to build a second cable by 2022-2023 for about €2 billion ($2.33 billion). Brexit could mean that new trading arrangements may be required to sell power via the interconnectors as Britain might not be allowed to participate in the European spot and intra-day power trading market, according to the Norwegian grid. Brexit could also mean that Britain will no longer be bound by EU competition rules, which currently allow interconnectors to seek British subsidy payments for providing supply capacity. Statnett said that plans to build NorthConnect by 2022 were unrealistic given the time.

Spanish oil major Repsol said it had bought the electricity generation and marketing assets of fellow Spanish firm Viesgo for €750 million ($868.73 million). With the deal, Repsol will add 2,350 MW of production capacity, 1,650 MW of which will be in two combined cycle plants and 700 MW of which will be hydro-electric, the company said.

The organization responsible for reliability of the North American power grid issued a report that identified risks to the US and Canadian electric systems that have been driven in part by changes in the generation fuel mix. The NERC said in its State of Reliability 2018 report that the power grid overall was reliable in 2017. NERC, however, provided several recommendations for the electric industry and regulators to adopt to improve future resilience. Resiliency became an issue after US Energy Secretary Rick Perry in September 2017 asked federal energy regulators to adopt rules to protect so-called fuel secure coal and nuclear plants from early retirement. The US Federal Energy Regulatory Commission rejected that proposal in January and said they would conduct a study on grid resilience. As dependence on electric infrastructure increases daily, NERC said resilience will become a more critical element of bulk power system reliability.[Energy News Monitor]

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